Glucagon responsiveness was selectrively lost in a dog kidney cell line, MDCK cells, after transformation by Harvey murine sarcoma vitus and this loss can be restored to the transformed cells by culturing the cells in the presence of various inducers, including butyrate and protaglandin E2. The ability of various PG analogs to induce glucagon sensitivity correlates closely with their ability to activate cyclic AMP in transformed cells. In fact, 8-Br-cyclic AMP is also an potent inducer, therefore, induction by PGE2 seems to be mediated by cyclic AMP. Previously we have shown that PGE2 induction is inhibited by a serum factor and TPA, a phorbol ester. Recently, we found that epidermal growth factor, at a concentration of 1 nM also inhibits the induction by PGE2. We have also found that during the induction of glucagon response, EGF receptors become desensitized in their ability to bind EGF. Our results suggest an interplay between PGF2 and EGF at the receptor level. EGF-dependent phosphorylation of its receptor is well established. The phosphorylation of EGF receptors by cyclic AMP dependent kinase has been shown by others. It is tempting to speculate that the state of cellular differentiation is governed by the expression of EGF receptors which are regulated in turn by specific patterns of phyosphorylation. Our current effort is to define these phosphorylation of EGF receptors under various induction conditions.